The prime property market in London has become beset by “lethargy” because of the uncertainty ahead of the outcome of this month’s referendum on the UK’s membership of the EU, according to the latest Knight Frank analysis.

Annualised price growth slowed to 0.1 per cent last month, the lowest rate since October 2009, Knight Frank reported, with the ratio of active buyers to available properties being halved over the past year.

Tom Bill, Knight Frank’s head of London residential research, said, “The market has become price-sensitive due to higher levels of stamp duty, but an indication of the Brexit effect is that demand in May has remained subdued even for properties where asking prices have fallen by 10 per cent or more. Demand was already more restrained as a result of the impact of two stamp duty increases in the space of 18 months.”

“However, despite the looming referendum, there are signs underlying demand is strengthening as buyers drop asking prices to reflect higher transaction costs. The number of transactions between January and mid-May was flat this year compared to 2015. Meanwhile, viewings increased 31 per cent between January and April versus last year, suggesting a degree of pent-up demand.”